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TMI Blog2018 (1) TMI 1335X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;financial debt.' A further prayer has also been made for issuance of direction to the Resolution Professional - non applicant to allow the applicant to join as a Member of the Committee of the Creditor and grant it proportionate voting share in the COC. A restrained order against the Resolution Professional - non-applicant has also been sought so that she may not act upon any decision taken or approval given by the Committee of the Creditor in furtherance of the CIRP of the Corporate Debtor till the final decision of the present application. 2. Brief facts of the case necessary for disposal of the controversy raised in this application are that the 'Financial Creditor' namely DBS Bank Ltd. being one of the lenders filed an application under section 7 of the Code 2016 against the Corporate Debtor namely 'ESSL'. That application was admitted on 27.06.2017 and moratorium under section 14 of the Code was declared. The Resolution Professional - non applicant was firstly appointed as IRP and then as Resolution Professional to conduct the Corporate Insolvency Resolution Process. 3. The Applicant ICICI Bank from time to time extended credit facilities to Edu Camp So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant to enforce any other right/security against Edu Comp Solution before enforcing the guarantee. The Applicant-ICICI asserted that in case the Edu Comp Solution goes to liquidation leading to shortfall in recovery of the loan amount the Applicant-ICICI is likely to suffer a huge loss as it would lose the valuable contractual right, therefore, its claim was required to be admitted in accordance with the terms of KSSL-guarantee. The Applicant-ICICI claimed that it has assured the RP-non applicant that the claims have been filed in good faith and in exercise of the lawful exercise of the contractual rights. The Applicant-ICICI clarified that it was not seeking any amount more than what is contractually owed by Edu Comp Solution and guaranteed by the Corporate Debtor The email dated 26.07.2017 is on record (Annexure F). 7. The RP-non applicant in its reply dated 28.07.2017 did not dispute the liability of the ESSL-corporate debtor towards the applicant but expressed her inability to verify the claim amount and quantum of liability from the books of the ESSL-Corporate Debtor on the pretext that the Applicant may reduce its claim proportionately against KSSL-Corporate Debtor. The all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irected the RP-non applicant to seek necessary direction from the NCLT with regard to the admissibility of the claimed amount. The Applicant-ICICI was not granted the voting right in the COC meeting and the RP stated that it would be decided in accordance with the order from NCLT. The applicant questioned RP as to under which provision of law the claim was admitted provisionally. Another email was sent on 16.08.2017 alleging that ESSL-Corporate Debtor guarantee constituted a Financial debt according to section 5(8)(i) of the Code. It was further claimed that in accordance with the provisions of section 24(6) of the Code the applicant has the right to vote in COC meeting in accordance with its voting share. Various emails were sent to the RP with the request to furnish the information and the steps taken from time to time (Annexure L and M). However, no information was furnished with regard to filing of application which was disposed of on 21.08.2017 being C.A. No. 257(PB)/2017. The Tribunal had clarified that the issue concerning the claim of the guarantee were within the domain of the RP (Annexure N). The applicant also sought information with regard to the detail of COC meeting a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -existence liability has been relied upon and therefore, it has been urged that claim against the principal borrower and corporate guarantor cannot be raised simultaneously. Placing reliance on the observation made by NCLAT in the case of Prowess International Pvt. Ltd. v. Parker Hannifin India Pvt. Ltd. It has been argued that the basic object of the Code is to consolidate and amend the laws relating to reorganisation of the Corporate Person and to balance the claims of all the stakeholders. While deciding whether the claim is to be admitted against a guarantor which has already filed its claims and in fact admitted by the RP in the CIRP of the principal borrower, it has to be kept in mind that the proceedings under the Code are not recovery proceedings. It has also been pointed out that under section 128 of the Indian Contract Act, 1872, a claim made by the applicant would be admissible against the guarantor only if the CIRP of the principal borrower is over and no claim can be filed simultaneously. It has not been disputed that the applicant has already filed a claim against the principal borrower in its CIRP. It has also been so stated in Form C filed by the Applicant under reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 rendered by this Bench in the case of Axis Bank Ltd. v. Edu Smart Services Pvt. Ltd., (IV-102(PB)/2017) and State Bank of India v. Saksaria Sugar Mills Ltd. It has also been pleaded that ESSL guarantee was invoked prior to 26.07.2017 i.e. the date of commencement of the CIRP. The applicant has also placed reliance on clauses 12, 19 and 33 of the Guarantee Deed to argue that the ESSL-Corporate Debtor is bound to pay in terms of guarantee agreement. 17. We have heard at length Mr. Krishnendu Dutta learned counsel for the applicant, Mr. U.K. Chaudhary learned senior counsel for the Respondent and Mr. Ajay K, Jain, for the Intervener. 18. Having heard the learned counsel we find that it would be first necessary to determine the status of the applicant ICICI Bank and the nature of debt owed to it by the Corporate Debtor 'ESSL'. In that regard definition of 'Financial Creditor' and 'Financial Debt' are required to be read as given in Section 5(7) and (8) of the Code which are as under: Section (1) to (6) (7). financial Creditors means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate Debtor has furnished Guarantee. Therefore, it follows that the applicant - ICICI Bank has to be regarded as 'Financial Creditor'. 20. The ideal situation would have been if one consolidated Corporate Insolvency Resolution Process had been initiated against the Edu Comp Solution by impleading all the Financial Creditor and guarantor like KSSL - Corporate Debtor as a party respondent. However, Edu Comp Solution has invoked section 10 of the Code inviting Insolvency Process and it is now facing the same. It creates an unenviable and paradoxical situation because there are two Resolution Professionals and two Committee of Creditors. In the Situation in hand the best course could have been that both the Resolution Professional could co-ordinate and as far as possible could have held the meetings of the Committee of Creditor together. However even that is not possible because the members of COC in both processes are different although some of the members are common. Therefore that course also does not commend itself to us. 21. The objection raised on behalf of the Resolution Professional that the applicant - ICICI Bank has no privity of contract would not be acceptable fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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